Deep Breath...BTC's Big Picture
Updated
So before we all end up screaming this is going zero, let's zoom out for second. BTC is likely bouncing around a horizontal triangle. As most of you know, horizontal triangles typically have 5 primary data points: ABCDE. After "E", horizontal triangles usually exit in the opposite direction they were entered. In this case, it would mean we exit out the top.
Looking at the large bearish impulse wave coming off of what we could consider "D", we are working on a 2.618 ext of our bearish wave 1. That would put us at roughly in between where we currently stand and $7,350 for the close of wave 3. Assuming that holds true, we could then retrace wave 3 back to around $8,130, assuming a .382 retracement, for a close of 4. After that, the idea would be wave 5 would close at the support of the bottom of our triangle.
Though the math makes a lot of sense for a lot of reasons, the huge caveat we all need to take into consideration is that waves can extend and retrace in a variety of options that can be influenced by market situations that are often unforeseen. The ratios I used to build this chart I believe are statistically most likely; however, there are elements of markets, especially crypto, that make probabilities a scary thing to rely upon. The one piece of advice that I can give is to be trading based on large scale confirmations. Trying to "catch the bottom" can really hurt you. Wait for solid volume confirmations. I am not going to touch this unless I have a solid bullish wave up and an obvious close with momentum of a wave 2. Whether it be a sub-wave structure that reaches towards the close of 4 or playing off of the bottom of the triangle, I am very much willing to sacrifice the discrepancy from the bottom to the close of 2 for the sake of acquiring a greater confirmation that I am not buying into a fake bounce. There are great opportunities to be had in the crypto market, so set the emotional trading aside and play smart so we can all avoid I mistake that makes us too jaded to take advantage of those opportunities moving forward. Best of luck.
Looking at the large bearish impulse wave coming off of what we could consider "D", we are working on a 2.618 ext of our bearish wave 1. That would put us at roughly in between where we currently stand and $7,350 for the close of wave 3. Assuming that holds true, we could then retrace wave 3 back to around $8,130, assuming a .382 retracement, for a close of 4. After that, the idea would be wave 5 would close at the support of the bottom of our triangle.
Though the math makes a lot of sense for a lot of reasons, the huge caveat we all need to take into consideration is that waves can extend and retrace in a variety of options that can be influenced by market situations that are often unforeseen. The ratios I used to build this chart I believe are statistically most likely; however, there are elements of markets, especially crypto, that make probabilities a scary thing to rely upon. The one piece of advice that I can give is to be trading based on large scale confirmations. Trying to "catch the bottom" can really hurt you. Wait for solid volume confirmations. I am not going to touch this unless I have a solid bullish wave up and an obvious close with momentum of a wave 2. Whether it be a sub-wave structure that reaches towards the close of 4 or playing off of the bottom of the triangle, I am very much willing to sacrifice the discrepancy from the bottom to the close of 2 for the sake of acquiring a greater confirmation that I am not buying into a fake bounce. There are great opportunities to be had in the crypto market, so set the emotional trading aside and play smart so we can all avoid I mistake that makes us too jaded to take advantage of those opportunities moving forward. Best of luck.
Note
Maybe....just maybe....Note
Bare with me on the length/density of this comment, I will try to be concise but want to help explain my risk/management thought process by walking you through my current trade. Remember in my first dialog box for this post I said, "I am not going to touch this unless I have a solid bullish wave up and an obvious close with momentum of a wave 2". Now "solid wave with momentum" means different things on different timelines. I day trade primarily off of 5 min and 15 min charts. I never go to bed with anything other than USD. My focus is making a living off of this process, not treating it as an investment. With that being said, this style is not for most because most don't have the time to trade on such a narrow timeline. But for those that do maybe there is something you can glean. We had a solid candle in the timeline that I was functioning. I through a fib chart up and waited for the close of wave 2 or what could be a "B" in an ABC correction. I put both of those options on this graph. Once I bought in, I set my stop loss at the .382 ($7,400). My audacious target is a 1.618 ext. of "A"...which is right around $7,664. If I start to see uncomfortable divergence prior to hitting that target I will take my profits. You can also tier your profit taking. I sold 50% at the first peak, 25% at the second peak and am currently holding the last 25% for the full .382 ext. or to be stop/lossed out still. If it hits "C" or "3", no matter how much I have in, I am all the way out. If it is a "C" we are headed down and I don't want to be holding through that. If it is a 3, there is a good chance it will retrace and close 4, at which time I can buy back in if it looks solid. These don't have to be your rules, everyone needs to find the best rules that work for them. The key is finding those rules and sticking to them to an intense degree. In the last 24 hours this method fo risk/management has me up 4.7%, which isn't a ton, but given what the last 24 hours has looked like....I'll take it. It also helped that I used this same process on LTC today and it worked out quite nicely :)
Note
I still have not exited the remaining portion of my trade yet. I am playing a structure, and that structure is not "broken" until it hits my stop/loss. If we were playing this emotionally, it would have been easy to get in and out several times, most likely not only losing money on the trades themselves but also paying fee commissions for fun. Just because we see a red candle occur while BTC bounces around a completely viable range does not mean that we automatically sell. I am still waiting for the completion of structure with some profits already in hand. Note
Moved my Stop/Loss on my last 25% to the fib above my purchase price as it would exit the final tier of my trade with a breach of this RSI level that has proven as support. Note
Stopped out on the breach of the RSI for 3 trades that were all positive numbers. One of them was only a tad over break even, but the others made it worth it. I am jumping back in for the next set-up. This could easily pop-up off of the support of the .786 fib and go for that wave 3 target, but I set a rules for myself that if that 15 min RSI support was breached I didn't want to risk it. I stuck to my rule and I am happy with it. If it "looks" like this is going to the wave 3 target I do not buy back in, that is the type of behavior that gets you into those loss-loops of never-ending in and out. If it does hit 3, i'll wait to see if 4 sets up for a good play on a wave 5. If it comes down, I'll look for the next set-up that meets my risk/reward. So far I am 5 for 5 today on keeping trades positive and over 5% in the last 24 hours. Giving the market atmosphere I consider that a win.
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